The Secrets that Corporations Keep
LYNN NEARY, host:
Now time for the Talk of the Nation Opinion Page.
Author Charles Fishman wrote in Sunday's Philadelphia Inquirer about corporate secrets, but not about the ones corporations keep from each other. For example, last week three people were arrested for trying to sell Coke's corporate secrets to Pepsi. Fishman, a writer for Fast Company magazine and the author of The Wal-Mart Effect, is more concerned about the secrets big corporations keep from the public.
Though Fishman uses Wal-Mart as an example, he is critical of all major corporations who keep important information from the public. Wal-Mart provided a response to the Philadelphia Inquirer, which was also printed on Sunday. You can get access to both those articles on npr.org.
Charles Fishman joins us now from his home in Philadelphia. Thanks for being on the show.
Mr. CHARLES FISHMAN (Author, The Wal-Mart Effect): Oh, my pleasure.
NEARY: Now you say in your column that we need more information about major corporations because they have such a huge impact on the economy. What kind of information are you talking about?
Mr. FISHMAN: I'm talking about information that has to do with how companies affect communities, employment, public assistance, pollution, jobs, imports and exports. Lynn, the laws under which most companies disclose information - of course, all big publicly traded companies disclose a certain level of information, because they're required to by law - those laws are 70 years old by and large.
We get a certain level of accounting data from companies about sales and profits, which, of course, we wouldn't get if we didn't require it. But all of these other things about the kinds of impact companies have on the way the economy functions - both at the community level and at the national level and the international level - we don't demand that information.
I suspect that 70 - I wasn't here 70 years ago - but 70 years ago, it probably didn't seem that important or urgent, and so we don't get it. And the only way to get it is to require it. Because if Wal-Mart reveals certain information about its healthcare programs, for instance, that may well put it at a competitive disadvantage with Target and Safeway and, you know, Kohl's and Best Buy.
But if you require all companies of a certain scale to release information, they learn everything there is to know on that topic about each other while at the same time, not - not - so they don't put themselves at a competitive disadvantage.
The problem is we can't manage our economy very well anymore without a much richer understanding about what impact companies are having. And we can't rely on them to provide that information.
NEARY: Well, you also said that it affects policy making, as well as the economy. In what way does it affect policy?
Mr. FISHMAN: Well, there's a perfect little example…
NEARY: This lack of information, I should say, that you're talking about.
Mr. FISHMAN: I'm sorry. There's a perfect little example right - from right there in the Washington Metro area. In the last year there was a yearlong debate in the state of Maryland about whether to require the largest companies in Maryland to provide a certain level of healthcare. And what Maryland ended up doing was passing a law requiring companies with 10,000 employees or more - that's pretty large in Maryland - to spend eight percent of their payroll in Maryland on healthcare for those employees.
If they didn't spend that eight percent, they either needed to change their benefits and up the percentage, or pay the difference to the state of Maryland. That law was referred to as the Wal-Mart law, because there are only four companies in Maryland that have more than 10,000 employees. The other three already spent more than eight percent of their payroll on healthcare. So it was aimed clearly at Wal-Mart.
During that year-long debate, the legislature of the state of Maryland could not get one vital fact from Wal-Mart, and that was, how much do you spend on healthcare for your Maryland employees? So there was a huge debate, there was a veto by the governor, the veto was overridden by the legislature - lots of angry conversation about whether this was fair to Wal-Mart and fair to big companies or not.
But in that whole debate, the legislative body of the state of Maryland couldn't get the one fact that would have actually helped it make good policy, which is, how much does Wal-Mart spend on healthcare?
By the way, how many Wal-Mart employees in Maryland are on public assistance for their healthcare? We don't know. Those are really basic facts. We're not talking about asking for the formula for Coke. That obviously falls into a different category. We're talking about the kind of information that we need to understand the performance and impact of companies on our communities and our economy so that we can make better choices.
NEARY: Now, we did invite Wal-Mart to participate in this discussion, and again, noting that your column used Wal-Mart as an example, though expanding the point to apply to all large corporations, or the biggest corporations. But Wal-Mart did provide this statement. I'm going to read it.
At Wal-Mart we place a special emphasis on being transparent. Our suppliers know how many units they sell to Wal-Mart, and have the unique ability to further classify their sales by store, by item, and even by hour. We also demonstrate a great deal of transparency on our Wal-Mart facts.com website, which details our company policies and business practices.
And in the response which your paper printed, Wal-Mart also said that they provide information about the number of people they employee in the state of Pennsylvania and that starting this year they released their equal employment opportunity data. So how do you respond to that?
Mr. FISHMAN: Well, I mean, I respond very simply. It's not, it's just as you say, it's not really about Wal-Mart. And yes, Wal-Mart, in the last year - Wal-Mart is 40 years old - Wal-Mart has begun to release some information. They do tell you how many employees they have in each state.
It's another great example. The book I wrote about Wal-Mart, a researcher and I tried to get information about the largest employers in every single state in America to see in how many of them Wal-Mart happened to be the number one employer in the state. In 25 states in America, the state government has the information about who the largest employers are and won't release it because they say it's not public information. The corporations have asked us not to say who the largest employers in the state of South Dakota are.
Well, that's absurd. In what sense is the number of employees that the largest, most impactful companies in a state, in what sense is that not public information? We're not asking for their names or their Social Security numbers or their salaries. All we want to know is who the top 25 are, how many people they employ, so that we can understand how the economy, in this case of a state, works, or of a country works.
Wal-Mart doesn't tell you where they import merchandise from and what the value of that merchandise is. Again, I wouldn't single out Wal-Mart, but if we're trying to understand the global economy, and the impact of the global economy on manufacturing in the United States, I think it'd be perfectly reasonable to rely, to require companies of a certain scale to tell us where the goods they sell in America come from, country by country, and dollar value by dollar value.
It's not our best - I assure you that big companies already know that. Toyota and Ford and General Motors and Toys R Us know how much they import from China and Bangladesh and India, and I think requiring that information to be released and being able to look at that by trend lines - I'm not saying tell us what you buy bicycles for in Bangladesh compared to your competitors. Just the macro number would really dramatically help our ability to both understand what's happening in our economy and manage it better.
It is still our economy, of course. It's not a random weather system. We manage it all the time.
NEARY: What prompted this particular column at this particular time?
Mr. FISHMAN: Well, this is one of the themes of the book I wrote about Wal-Mart, which is that Wal-Mart is an example of how corporate secrecy, combined with corporate scale, has changed in the last 50 years. And so the Philadelphia - I don't actually work for the Philadelphia Inquirer. I live in Philadelphia and that's where this commentary appeared. But the Philadelphia Inquirer was very interested in that idea, and so that's why I wrote about it now. But I think if you look around at what's happening in the world, we're just passing through the end of this wave of corporate scandals. How much data do we require from companies right now? Not quite enough so that we could see that Enron and WorldCom were criminal enterprises in an ongoing fashion. We don't do enough data to see that.
And the second thing is that I think Americans are increasingly feeling like the global economy is something a lot like the weather, that we're sort of all at the mercy of this - this idea that the global economy sort of sails forward and we have to sort of struggle along and do the best we can.
But there's nothing inevitable about the way the current economic system is set up. In the ‘20s and ‘30s the United States had high tariffs that protected the domestic manufacturing industry, and that allowed us, in fact, for instance, to fight World War II, because when World War II came along, we had the skills and the facilities to make all kinds of things ourselves.
The cost of that, of course, was those products probably cost more money in the ‘20s and ‘30s than they would have otherwise, because we weren't importing. My point isn't that we should have tariffs or shouldn't have tariffs. It's that we are the creators of our own economy, we are the managers of it. If we are uncomfortable with the idea quote-quote “that the world is flat,” we are in a position to make decisions about that, but we can't make those decisions without a lot more information.
I'm not advocating any regulation of retailers or carmakers or anybody else. I'm saying we don't actually understand the impact these big companies have on the way our economy operates because the information we request from them, we require from them, is two or three generations out of date.
NEARY: Charles Fishman, thanks so much for being with us today.
Mr. FISHMAN: My pleasure.
NEARY: You can read Charles Fishman's op-ed piece and the statement from Wal-Mart at the TALK OF THE NATION page at npr.org.
Charles Fishman is a senior writer for Fast Company Magazine and author of The Wal-Mart Effect. He joined us from his home in Philadelphia, Pennsylvania.
And you are listening to TALK OF THE NATION from NPR News.
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